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The Iluka Resources Limited (ASX: ILU) share price is falling this morning. This comes after news that a subsidiary of the company is taking a 6-month break from its operations due to business challenges was released. At the time of writing, the Iluka Resources share price is trading for $7.64, down 6.37%.

The mineral sands producer’s subsidiary, Sierra Rutile, plans to begin a 6-month break on 19 November 2021.

Sierra Rutile is wholly owned by Iluka. It produces rutile, ilmenite, and zircon in the West African nation of Sierra Leone.

Let’s take a closer look at the news that could drive the Iluka share price this morning.

Breathing space

According to Iluka, Sierra Rutile has been struggling with business challenges recently. Particularly, since the beginning of the COVID-19 pandemic.

Sierra Rutile plans to use the 6-month pause to evaluate whether it can continue its operations in its current mining area.

As well as announcing Sierra Rutile’s pause, Iluka also stated its subsidiary has retracted its production outlook of 145,000 tonnes of rutile over 2021.

During its operational pause Sierra Rutile will be working to reduce its cost base. It hopes that doing so will make it profitable again.

Sierra Rutile also plans to use the break to attract new third party investors who can help it continue its current developments.

If it can reduce its cost base and find new investors, Sierra Rutile says it might be able to avoid or lift the pause on its mining operations.

Currently, Sierra Rutile is at the feasibility stage of developing the Sembehun group of deposits – located between 20 to 30 kilometres from its current operations.

According to Iluka’s announcement, collectively, the Sembehan deposits are the world’s largest and best quality natural rutile resource.

Furthermore, Sierra Rutile has notified the Sierra Leone Government of its plan to pause its operations. Iluka states its subsidiary will also be working closely with the Government to avoid or minimise its operational pause.

Iluka Resources share price snapshot

The Ilkua Resources share price has been performing well on the ASX lately.

Currently, the Iluka Resources share price is up 23.8% year to date. It’s also gained 96.6% since this time last year.

The company has a market capitalisation of around $3.4 billion, with approximately 422 million shares outstanding.

More reading

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• ASX 200 Weekly Wrap: Bank shares push ASX 200 towards all-time high
• These were the best performing ASX 200 shares last week
• Deterra (ASX:DRR) share price outperforms on royalty update
• The Iluka (ASX:ILU) share price is rising today. Here’s why

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Volatility, but the kind that wrecks your portfolio is every investor’s nightmare. And speaking of volatility, cryptocurrencies across the board crashed overnight.

Bitcoin (CRYPTO: BTC) fell by as much as 30% from ~US$43,500 on Wednesday to a low of US$30,000 around midnight. The crash was even scarier for Ethereum (CRYPTO: ETH), which dived from US$3,400 to lows of around US$1,840 or a 45% fall.

It wasn’t unusual for other tokens such as Dogecoin (CRYPTO: DOGE), at the height of the selloff, to be down by more than 50%. Thankfully for investors, the digital currencies did manage to stage a partial comeback from their worst of their lows.

What’s causing crypto to crash?

China draws the line against crypto 

A joint statement from China’s finance, banking and clearing bodies effectively banned domestic financial and payment institutions from any form of cryptocurrency-related activities. 

Elon turns his back on Bitcoin 

Elon Musk has been a major supporter of Bitcoin and a driver of cryptocurrency prices. However, the significant energy usage required for most crypto mining is counter-intuitive to the goals of Tesla Inc (NASDAQ: TSLA). 

Musk significantly downgraded on his public support for Bitcoin recently by stating Tesla would no longer accept Bitcoin as a payment option. 

Crypto slump triggers $8 billion in liquidations 

The sudden pullback in crypto prices sent earthquakes across its derivatives markets. There are reports that this has led to more than US$8 billion in position liquidations due to margin calls. Bybt observes that in the last 24 hours, ~840,000 traders were liquidated, amounting to a total value of US$9.13 billion. 

Crypto prices could have been pushed lower as leveraged investors and traders were forced to sell their positions. 

Is there still hope for Bitcoin and other cryptos? 

On a more positive note, the Bitcoin price managed to recover to around US$37,500 at the time of writing from lows of US$30,000, or a swift 30% bounce. The bounce was more ridiculous in the case of Dogecoin, which bounced more than 50% from lows of 21 US cents to 36.5 US cents at the time of writing. The narrative is the same for the likes of Ethereum, which bounced 40% from the US$1,830 low to US$2,410 at the time of writing.  

Furthermore, China’s ordeal with cryptocurrencies is nothing new. In September 2017, China banned Initial Coin Offerings (ICOs) in an attempt to protect investors. The ICO rules also banned cryptocurrency trading platforms, resulting in most trading platforms shutting down. The country’s new policies have now taken the ban to institutions, making it clear that they cannot accept or settle any virtual currencies. 

The push-pull effect of Elon Musk’s tweets is also nothing new. The suspension of Bitcoin payments also came with the comment that “cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment”. 

More reading

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• If Bitcoin investing isn’t risky enough for you, try this

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The Sezzle Inc (ASX: SZL) share price is pushing higher on Thursday.

In morning trade, the buy now pay later (BNPL) provider’s shares are up 2% to $7.47.

Why is the Sezzle share price pushing higher?

Investors have been buying Sezzle’s shares after the release of an announcement this morning.

According to the release, the company has now launched its long-term financing options with Ally Lending. It is the personal lending arm of Ally Bank, the banking subsidiary of Ally Financial (NYSE: ALLY).

The company notes that this financing solution expands upon Sezzle’s core BNPL product. It offers longer loan terms for higher ticket transactions.

Ally Lending enables monthly fixed-rate instalment-loan products that extend up to 60 months in length and US$40,000 per instalment plan through a fully digital application process. This is similar to the Zip Money offering by Zip Co Ltd (ASX: Z1P).

Management believes that this supports its mission of financial empowerment. It notes that Ally’s financing solution is a more transparent, responsible, and consumer-friendly option for consumers. As a result, it feels that the launch of Sezzle’s long-term product is an additional advantage to shoppers that use Sezzle as a financial co-pilot on their path to financial empowerment.

Sezzle’s President, Paul Paradis, commented: “We heard from our merchants that they were looking for solutions to suit a wider range of products, including higher-priced items. With Ally Lending’s personalized, flexible financing solutions now available on Sezzle’s platform, we offer shoppers a responsible, transparent way to finance higher ticket items over a longer period. It’s a win-win for retailers and consumers.”

Despite today’s gain, the Sezzle share price is still down a massive 38% from its 52-week high of $11.99.

More reading

• Down 24% this month, is the Sezzle (ASX:SZL) share price a buy?
• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• The Afterpay (ASX:APT) share price breaks below $100
• Sezzle (ASX:SZL) share price sinks 5%: Time to buy?

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The Qantas Airways Limited (ASX: QAN) share price has been a positive performer on Thursday.

At the time of writing, the airline operator’s shares are up 3% to $4.67.

Why is the Qantas share price taking off?

This morning Qantas released a market update and revealed that a sustained rebound in domestic travel demand, and the performance of its Freight and Loyalty divisions, is continuing to drive the company’s recovery from the COVID-19 pandemic.

According to the release, based on current trading conditions, Qantas expects to be statutory free cash flow positive for the second half of FY 2021.

In addition, the company notes that its net debt peaked at $6.4 billion in February and is expected to reduce below $6 billion by the end of the financial year.

Furthermore, the company is set to achieve positive free cash flow whilst it still has high levels of liquidity. At the end of April, Qantas had total funds of $4 billion, including cash of $2.4 billion and $1.6 billion of undrawn debt facilities.

And while the company continues to expect to post a statutory loss before tax in excess of $2 billion in FY 2021, its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected in the range of $400 million to $450 million.

Though, it is worth noting that this guidance assumes no further lockdowns or significant domestic travel restrictions.

Cost reductions success

Also giving the Qantas share price a boost today was an update on its cost reductions. Qantas revealed that it is making significant progress with its target of at least $1 billion in annual cost reductions by FY 2023. Today’s update shows that $600 million of cost reductions is expected to be delivered this financial year.

This includes the completion of 90% of redundancies associated with the previously announced 8,500 job losses and a two-year wage freeze that will apply to the next round of enterprise agreements. Following the freeze, there will be 2% annual increases compared with 3% increases pre-COVID.

In addition to this, the company is reducing its costs of sale by lowering front-end commissions paid to travel agents on international tickets from 5% to 1%. This could be a bit of a blow to the likes of Flight Centre Travel Group Ltd (ASX: FLT).

However, Qantas advised that this change won’t take effect until July 2022, giving time for the industry to adapt. It notes that travel agents remain an important partner and Qantas will work with them on broader revenue opportunities, particularly through technology.

Management commentary

Qantas’ CEO, Alan Joyce, said: “We have a long way still to go in this recovery, but it does feel like we’re slowly starting to turn the corner. It’s great to see so many of our people now back at work and the majority of our fleet back in the air. Our recovery strategy of targeting cash-positive flying rather than pre-COVID margins is helping increase activity levels and repair our balance sheet.”

“The fact we’re making inroads to the debt we needed to get through this crisis shows the business is now on a more sustainable footing. The main driver is the rebound of domestic travel, which now looks like it will be bigger than it was pre-COVID, at least until international borders re-open.”

“Jetstar was profitable on an underlying EBIT basis in April, which was largely due to strong leisure demand over Easter and school holidays, but it’s an important sign that we’re on the right path.”

The Chief Executive also spoke about international borders and is hopeful they will reopen sooner rather than later.

He explained: “We’ve adjusted our expectations for when international borders will start opening based on the government’s new timeline, but our fundamental assumption remains the same – that once the national vaccine rollout is effectively complete, Australia can and should open up.”

“That’s why we have aligned the date for international flights restarting in earnest with a successful vaccination program. No one wants to lose the tremendous success we’ve had at managing COVID but rolling out the vaccine totally changes the equation. The risk then flips to Australia being left behind when countries like the US and UK are getting back to normal.”

“Australia has to put the same intensity into the vaccine rollout as we’ve put on lockdowns and restrictions, because only then will we have the confidence to open up,” he concluded.

More reading

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• The Sydney Airport (ASX:SYD) share price slumped 5% today. Here’s why
• Why Ausnet, Qantas, Suncorp, & Sydney Airport shares are tumbling lower
• Here’s why the Qantas (ASX:QAN) share price is sinking today

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In morning trade, the Nufarm Ltd (ASX: NUF) share price is storming higher following the release of its half year results.

At the time of writing, the agricultural chemicals company’s shares are up 5% to $5.15.

How did Nufarm perform in the first half?

For the six months ended 31 March, Nufarm reported revenue of $1.65 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $233.6 million. This represents an increase of 20% and 118%, respectively, over the prior corresponding period.

Things were even better on the bottom line, with the company swinging from a $122 million half year loss in FY 2020 to a $59 million half year profit in FY 2021.

Management advised that the significantly improved result reflects revenue and EBITDA growth in all regions and Seed Technologies, with particularly strong growth in APAC and Europe. In addition to this, the successful execution of its ongoing Performance Improvement Program initiatives is also contributing to its earnings growth.

However, despite the rebound in its performance, the Nufarm board has decided not to declare an interim dividend. Though, a review of capital management principles will be finalised by the end of 2021.

Nufarm’s Managing Director and CEO, Greg Hunt, said “Strong early demand and channel restocking in key markets has delivered a very strong first half result. We are realising benefits from the leverage of our APAC business to improved seasonal conditions and the earnings recovery in our European business is on track.”

“Our North American and Seed Technologies businesses are delivering good growth, with currency translation impacts somewhat masking the true underlying performance of our North American business. Earnings growth and improved working capital management is driving cash generation and our balance sheet is strong,” he added.

Outlook

One thing that could be holding back the Nufarm share price slightly today is management’s outlook for the remainder of FY 2021.

It has warned that its FY 2021 earnings will be significantly weighted to the first half. Therefore, investors shouldn’t expect its strong growth to be repeated over the next six months.

Mr Hunt explained: “We have delivered a strong first half result and momentum has continued into the second half, however this has not altered our expectations for the full year. We remain very focused on our key objectives of growing volumes and revenue; improving margins; generating more cash; and delivering stronger returns for shareholders.”

More reading

• 5 things to watch on the ASX 200 on Thursday
• Nufarm (ASX:NUF) share price rises ahead of next month’s profit results
• Looming grocery price shock to impact on these ASX shares

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Motley Fool Chief Investment Officer, Scott Phillips, hosts this brand new Motley Fool series: Stock of the Week.

Each week, he’ll be joined by one of the Motley Fool investment team to highlight one company that’s currently a Buy recommendation in one or more of our services.

This week, he’s joined by our Director of Research, Kevin Gandiya to talk about booming online furniture retailer, Temple & Webster (ASX: TPW).

As always, any advice we give in these videos is general in nature and doesn’t take your personal needs, objectives, goals or risk tolerance into account. You should decide for yourself (or speak to a licensed personal financial adviser to help you decide) whether it’s right for you.

[youtube https://www.youtube.com/watch?v=hMi3zG6twow&w=560&h=315]

More reading

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• Down 9% today, why the Redbubble (ASX:RBL) share price continues to tumble

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There are some ASX shares that are seeing rapid growth in revenue but their share prices are declining significantly in May 2021.

Share markets are becoming more volatile on concerns about inflation and interest rates. There are also some company-specific issues that are causing investors to think again:

Redbubble Ltd (ASX: RBL)

Over the last month the Redbubble share price has fallen by almost 40%. The artist-designed e-commerce product business continues to report a high level of sales growth for shareholders.

Redbubble recently revealed its FY21 third quarter update. It showed marketplace revenue growth of 54% to $103.4 million, 55% gross profit growth to $39.8 million, operating expense growth of 3% and earnings before interest and tax (EBIT) growth of 91% to a loss of $0.9 million.

The ASX growth share pointed out that it’s benefiting from and trying to capitalise on a number of trends. There’s the continuing migration of shopping from offline to online. There’s an increasing desire from consumers for unique goods and services that express and celebrate their personal interests and individualism. There’s the growing ‘creator economy’ which is providing new and exciting designs and products that feeds the search for personalisation.

Redbubble sees a “tremendous opportunity” to continue growing and scale the business. So it’s taking decisions that have a focus on building the strongest possible business over the longer-term. That means a high level of investment, experimenting and execution.

Whilst earnings before interest, tax, depreciation and amortisation (EBITDA) should be positive over an annual period, the margin will be low single digits as it invests heavily during this period.

Redbubble is aiming for annual marketplace revenue of $1.25 billion in a few years.

EML Payments Ltd (ASX: EML)

The EML share price fell 46% yesterday after telling investors about a regulatory issue.

EML told that market that its Irish regulated subsidiary, PFS Card Services (Ireland) Limited (PCSIL), has received correspondence from the Central Bank of Ireland (CBI) raising significant regulatory concerns.

The CBI concerns relate to PCSIL’s anti money laundering and counter terrorism financing, risk and control frameworks and governance. The correspondent states that the CBI is minded to issue directions.

The correspondence does not concern the ASX growth share’s Australian or North American operations, or the operations of PFS’ UK subsidiary, or EML’s other Irish regulated subsidiary (EML Money DAC).

The directions, if made, could “materially impact” the European operations of the PFS businesses, including restricting PCSIL’s activities. In the quarter ending 31 March 2021, around 27% of EML’s global revenue was derived from programs operating under PCSIL’s Irish authorisation.

However, the business is still predicting a lot of underlying growth. Given the timing and early stages of discussion with the CBI, EML is not yet able to estimate the potential direct and consequential costs (including but not limited to legal costs) and impacts of the correspondence on the group’s overall FY21 result.

Excluding those costs and impacts, EML said it’s on track to achieve the underlying results previously guided. That includes revenue growth of 48% to 56%, EBITDA growth of between 54% to 66% and underlying net profit (NPATA) growth of between 25% to 40%.

More reading

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• Why BHP, EML Payments, Laybuy, & St Barbara are sinking today
• ASX 200 down 1.7%: Appen jumps 12%, EML Payments crashed 37%

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Inflation fears and other macro drivers are holding our market back from hitting fresh record highs, but Morgans thinks these are just distractions and it’s identified several ASX shares with material upcoming catalysts.

You can blame worries about rising costs and comments from the US Federal Reserve for the souring mood.

Commodities tumbled overnight as investors fretted about inflation, while some Fed members hinted at winding back emergency support as the US economy picks up steam.

ASX share catalysts will beat inflation fears

The developments are likely to cause some consternation on the S&P/ASX 200 Index (Index:^AXJO) this morning. But Morgans thinks investors should use any pullback to buy a select group of ASX stocks that it believes will release positive news in the near-term.

“Adverse macro-economic forces – or at least investor fears of them – have again taken control of short-term market direction,” said Morgans.

“But as we’ve seen many times before, we think company fundamentals will again re-assert themselves as we view inflation fears as overdone.”

Buy ASX shares with potential positive updates

It’s worth remembering during these unsettling times that ASX shares have largely been issuing positive trading updates.

“The far better than feared performance of Aussie corporates through this period has meant these updates often drive share prices as much as 1H/FY results do,” added Morgans.

“We’ve also seen the market increasingly move in anticipation of them. So the ability to identify stock catalysts early has become an important tool for investors in the current climate.”

Some key ASX shares to buy now

One of these ASX shares that Morgans highlighted is the Sonic Healthcare Limited (ASX: SHL) share price.

It sees solid upside to consensus forecasts given ongoing worldwide COVID-19 testing and increases in the base testing business.

Another is the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price. Debate on Australia turning into a “hermit kingdom” is unlikely to ground the airport operator.

Monthly traffic updates show a ramp-up in domestic passenger volumes and it’s only a matter of time before international travellers return.

Meanwhile, Morgans sees big upside to the Lovisa Holdings Ltd (ASX: LOV) share price.

“Re-opening of Europe at the same time Beeline stores open (20% footprint) could provide a reasonable earnings tailwind,” explained Morgans.

“The company’s ability to contain costs could also lend upside risk. Evidence of strong trading in regions opening up post COVID.”

More reading

• 5 things to watch on the ASX 200 on Thursday
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• What does zero wage growth mean for the ASX 200?
• 2 high-yielding ASX 200 dividend shares
• AGL share price hits lowest level since 2004 as dividend tops 10%

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The Sezzle Inc (ASX: SZL) share price has declined by 24% during May 2021. With how much the buy now, pay later business has fallen – is it now a buy?

A few weeks ago the company released its FY21 first quarter update to the market. Investors got a chance to see how the company is tracking in 2021.

First quarter update

The business reached new highs in the first quarter for underlying merchant sales (UMS), active consumers, active merchants and repeat usage.

UMS for the first quarter increased 214.1% year on year to US$375.1 million. March’s UMS exceeded December’s by 30%.

Sezzle income as a percentage of UMS remained steady year on year at 5.9%.

The company added 400,000 active customers during the quarter, the total went up 126.6% year on year to 2.6 million consumers. Active merchants increased 167.5% year on year to 34,000.

The business continues to win over larger enterprises, including Market America Worldwide and Lamps Plus. Market America is the owner of the e-commerce site shop.com.

Sezzle’s consumer profile keeps improving every quarter. Active consumer repeat usage increased to 90.7%, which was the 27^th consecutive month of improvement. The top 10% of Sezzle’s consumers, on average, transact four times a month.

The business has seen a positive shift of more than 10 percentage points year on year to the automated clearing house (ACH) as a payment method, which comes with lower costs.

Sezzle has also been busy behind the scenes with other initiatives. On 30 March 2021, it announced it has received the certification required to achieve B Corp status, which is for businesses intent on advancing environmental, social and economic causes.

It also intends to file a registration statement with the Securities and Exchange Commission in the US for a proposed initial public offering (IPO). The number of shares, the use of the proceeds and the price have not yet been determined.

The company is in the early stages of growth in Canada, India and Europe. It’s now looking to expand into Brazil.

Is the Sezzle share price a buy?

Ord Minnett was impressed by the Sezzle quarterly update, beating expectations. UMS, average usage and income were all better than expected. The broker is also excited by the idea of an IPO in the US.

The broker’s price target for the buy now, pay later company is $11.90. That suggests a potential upside of over 60% over the next 12 months, if the prediction becomes true.

More reading

• ASX 200 falls below 7,000, Xero sinks, Afterpay falls
• What’s driving the Afterpay (ASX:APT) share price to 8-month lows?
• The Afterpay (ASX:APT) share price breaks below $100
• Sezzle (ASX:SZL) share price sinks 5%: Time to buy?
• Why the Afterpay (ASX:APT) share price is sliding 5%

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A fund manager has warned retail investors not to fall into a common trap when selling out of a stock.

According to Forager Funds chief investment officer Steve Johnson, his funds generally prefer to hold onto stocks to let them play out their thesis.

But since the COVID-19 crash in March last year, that philosophy has temporarily taken a back seat. 

“The turnover has been extremely high — relative to history — over the past 12 months,” Johnson told a Forager video to clients.

Forager portfolio manager Gareth Brown said that this was because the market has been moving so rapidly in recent times.

“It’s really important to understand that the turnover has been massive because of the volatility we’ve had this year.

“We’ve been buying stocks at a deep discount to where we think fair value is. It closes that gap — and then some — in a matter of weeks and months.” 

Selling a share because the price is up is WRONG

Notwithstanding his funds’ recent high turnover, Johnson said that they didn’t exit from those companies simply because the share price went up.

And he believes retail investors need to understand this, to avoid a massive error.

“The main mistake you make is, the share price is up therefore I sell,” said Johnson.

“You’ll first want to ask yourself a question: Was my estimate of the value of this business right when we first bought the stock? What’s changed since then — and how much do I think it is worth today?”

Therefore the potential of the business compared to the current price should be the trigger, not an arbitrary price target.

And the value of the company may well have changed up or down since you first bought into it.

“The main lesson for me out of all of this is that the value of a business — it’s not a static thing,” Johnson said. 

“Constantly be thinking of the value itself as something that’s dynamic and where you’re constantly trying to update it and get it right for what’s in front of you rather than what’s behind you.”

Brown reminded clients that the worthiness or potential of a business isn’t just dependent on hard numbers shown in the latest results.

“Recognise the power of good management, the power of the intangible element of some businesses, competitive position, and the like,” he said.

“There are certain businesses you want to give more leeway to than others.”

More reading

• The 6-bagger ASX share that I now regret selling: fundie
• 2 exciting ASX growth shares rated as buys
• Got cash to invest? Here are 2 ASX shares to buy
• LIVE COVERAGE: ASX to edge higher; Nufarm to report half year results
• 2 high quality ASX dividend shares with yields above 4%

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